We Won't Let Them Vote At All

Investors are furious at Snap’s decision to deny them a say in running the company when the owner of message app Snapchat launches one of the US’s largest tech initial public offerings.

A dozen of the US’s biggest pension funds have sent a letter of objection to Snap, while one investment industry leader predicted its IPO could “open the floodgates” to similar governance arrangements at companies around the world.

I am sure that many in our political system, surveying the result of the last election, quietly rue the day they gave anyone the vote. Snapchat’s founders, however, are working to make that a reality in the corporate world, something which they are legally in their rights to do. Whether the financial industry, through its various market organisations, will let them get away with it is another matter altogether.

It’s fair to say that what voting “means” on a corporate level is different from what it is on a political one. But having voting shares does have an impact on how publicly owned companies are run. Usually removing voting rights from stock is compensated for by giving those stockholders “first dibs” on the success (and last dibs on the failure) of the company, as is the case with preferred stock. (Bondholders are even above that if things go belly up.)

Snapchat’s founders, however, have decided to give their common stockholders the worst of both worlds: no voting rights and back of the line treatment in the event Snapchat snaps.

I still find it interesting that a social media company, which (along with its brethren such as Facebook and Twitter) have bred the “online trash fire” that social media has become with the last election, has decided to dispense with voting altogether.

And I am sure that my mother, who was obsessed with the existence (and voting potential) of a non-family minority block in the stock of our family business, is cheering this on.